beyondbrics

By Martha Gill

As Brazilians warm up to hosting the 2016 Olympics and the 2014 World Cup, practising their stretches and squat-thrusts, they have suddenly begun to worry about their English.

This anxiety is pushing up a booming market for English language tuition in Brazil, which has grown as the economy develops and becomes more globalised. And as Brazilians look for ways to brush up their language skills, one Brazilian company is looking to the US to help fill the gap.

Abril Educação (ABRE11:SAO), a Brazilian educational company, this week paid $2m to acquire a 5.9 per cent stake in Livemocha, a Seattle-based company that bills itself as “the world’s largest online language learning community”.

The partnership would use the web to bring together Brazilian students with US-based teachers. The BM&FBovespa-listed Abril Educação had a revenue of R$510m in 2010, according companies figures from Bloomberg, and is controlled by Brazilian media corporation Grupo Abril. It sells textbooks, and serves approximately 30m Brazilian students. Livemocha, on the other hand, is a privately owned company which sets up language lessons via video-link. It currently has 11m members – 250,000 of whom are English teachers.

“There is an increasing awareness in Brazil of the importance of learning English, especially in anticipation of the World Cup,” Manoel Amorim, Abril Educação’s chief executive told beyondbrics. “Amongst emerging markets, Brazil is exceptionally low in proficient English speakers – only about 2 per cent can speak English at any competent level.”

He identifies several key groups in the emerging market: “There are 45m Brazilian school and university students who are looking to supplement their learning, and 30 to 40m bank and government workers for whom English is increasingly a requirement.”

Overlapping with these groups are the 80m Brazilians now online, 95 per cent of whom, he estimates, are learning or improving their English.

It is the online group that has seen the most significant growth in recent years. “Six years ago the number of broadband subscribers was 3m. That number reached 68m last year, and is predicted to grow to 100m by the end of 2012,” Livemocha’s chief executive Michael Schutzler told beyondbrics.

Brazil’s market is currently dominated by local educational companies, but these struggle to recruit teachers fluent in English. As more Brazilians access the internet, US and British companies, with their ready supply of native speakers, will be given a huge advantage over these homegrown companies.

Livemocha is just beginning to make a dent in the Brazilian market, but ranks itself amongst three other US companies leading the way: Rosetta Stone (RST:NYQ), Berlitz and Global English. According to a recent Alexa.com traffic ranking for users in Brazil, Livemocha is being used 10 times more than Rosetta Stone.

Language teaching is starting to participate in a growing global trend known as ‘person to person offshoring’, a sector predicted by research company Evaluserve to reach a value of $2bn by 2015. Services that have traditionally involved people talking to each other in the same room are using internet video-linking to move ‘off-shore’ – taking advantage, crucially, of wage differences.

Whilst tutors in developing economies provide cheap maths and science teaching to lower-income western students, the west aims its English language lessons at the socially aspiring middle and higher tiers in the brics.

“The single biggest motivation for learning English is socio-economic ascension,” says Michael Schutzler. With an economy growing at the rate of Brazil’s, demand can only increase.

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